The commission did not recommend any changes to overtime penalty rates, night penalty rates or shift loadings, nor changes to rates for nurses, teachers or emergency services workers.

"Penalty rates have a legitimate role in compensating employees for working long hours or at asocial times," it stated.

"However, Sunday penalty rates for hospitality, entertainment, retailing, restaurants and cafes are inconsistent across similar work, anachronistic in the context of changing consumer preferences, and frustrate the job aspirations of the unemployed and those who are only available for work on Sunday.

"Rates should be aligned with those on Saturday, creating a weekend rate for each of the relevant industries."

Announcing the report's findings, Employment Minister Michaelia Cash said the Government would examine the recommendations and, if the case for sensible and fair changes to workplace relations were outlined, they would be taken to the next election.

Senator Cash said the commission recommended that penalty rates should continue to be set by the independent Fair Work Commission and the Government has no plan to change the rates itself.

"The only recommendation that the Productivity Commission makes on penalty rates is directed to the independent Fair Work Commission and that is in relation to the weekend penalty rates for the retail and hospitality industry," she said.

"Whether or not the independent Fair Work Commission accepts or rejects this particular recommendation is a matter for the Fair Work Commission."

"The Government has said that if there is a good case for fair and sensible changes to the workplace relations framework, these will be clearly outlined and they will be taken to the Australian people and we will seek a mandate at the next election," she said.

Labor's workplace spokesman Brendan O'Connor described the report as Prime Minister "Malcolm Turnbull's gift that no worker wants for Christmas".

Mr O'Connor said called on the Government to reject the recommendation to change penalty rates.

"We want to see the economy grow, but people share in that growth," he said.

"The fact is we do have a weekend where people enjoy themselves, spend time with their families.

"We usually have weddings, christenings, birthdays, sporting events, most often are on weekends, yet of course we have millions of Australians who work on those days providing services and goods to the bulk of Australians.

"They should be rewarded for the deprivation that they have insofar as spending time with their friends, their family, and others."

Retailers support clarity over migrant worker rules

Mr O'Connor conceded some of the work by the commission "has been good work", a comment backed by the head of the Australian Retailers' Association.

The association's executive director, Russell Zimmerman, supported the recommendation to change the Fair Work Act to clarify migrants working illegally would be covered and could seek compensation if underpaid.

"There has been an incredibly large amount of publicity around that at the moment and I know that many, many employers are very concerned about that, particularly in the franchising industry," he said.

"They're checking through their franchisees to make sure that they are compliant with the awards."